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The Irony in the GameStop Story

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Re: The Irony in the GameStop Story

#81

Post by jakelazaroff »

briefcomment wrote: post #76
bilbo0s wrote: post #64

Earlier quoted context omitted.

It’s not really public v hedge funds, because the vast majority of both of them will be on the losing side. The reality is that market makers are probably gonna be the only winners here.

If this is successful, hedge funds will suffer, some retail investors will make a huge return, and some other retail investors will suffer losses at the end, much more than otherwise would have. Obviously not ideal, but no situation is perfect. The losses to the retail investors can be minimized if more join in and they take smaller positions on average. How do market makers get outsized benefits from this? I'm uninf…

Here’s a good explanation: https://twitter.com/toxic/status/1353890766800621569?s=21

TL;DR Citadel sees Robinhood order flow and can get in front of it, and also bought a chunk of Melvin on the cheap when they got squeezed out of their short position.

Re: The Irony in the GameStop Story

#82

Post by cvak »

holtalanm wrote: post #58
wpasc wrote: post #20

Earlier quoted context omitted.

Unfortunately, the hedge funds will be 100% fine and probably capitalize on this event and somehow still come out ahead. The WSB folks who started this have probably already sold out so they're fine. It's average everyday folks who bought into this robin hood (not the app) story and purchased stock at recent prices who will lose a lot of money

> The WSB folks who started this have probably already sold out so they're fine the biggest player in /r/wallstreetbets is /u/DFV, and last I checked he had cashed out a small portion of his position. Still has like 30mill tied up in GME stock though. Crazy story looking at his posts from 2019-now, though. At one point his GME portfolio was only worth 42k, and now it is over 40mill.

He has not "cashed out", some of his options expired ITM.

Re: The Irony in the GameStop Story

#83

Post by DennisP »

drewcon wrote: post #8

I still feel like these stories are missing a core distinction. If these WSB folks rallied around GME because they were true believers of a beloved brand with faith in a turn around plan, god love em. I think that’s an interesting phenomenon that upgrades retail collective trading in much the same ways mutual funds behave on behalf of loads of retail investors. But that’s not what happened. The brand is irrelevant. I…

Nobody complains about hedge funds making short-term trades based on technicals. Momentum traders, swing traders, automated high-frequency traders front-running order flow, that's all kosher. But let a bunch of retail traders step outside of long-term fundamentals and beat the funds at their own game, and suddenly that's a problem.

People keep assuming the WSB crowd are idiots. I don't think it's a given that they can't do risk management, and in a short squeeze it's generally the short sellers who end up holding the bag.

Anyone who FOMOs in this week is probably in for a hurtin', but the ones who got in before this was all over the media have a good shot at significant profit.

Re: The Irony in the GameStop Story

#84

Post by heliodor »

drewcon wrote: post #50
spiderfarmer wrote: post #35

Earlier quoted context omitted.

I think you don't understand what wallstreetBETS is all about. It's not investments. It's playing the casino. They are betting. And proud of it. And this is one of the first times they have an advantage over the rest of the table. Because a couple of hedge funds overplayed their hand on a stock small enough to be influenced by the people active in that sub. They are ready to lose it all just for the lulz. It's entert…

No I do understand that. And I’m suggesting that is a bad thing. It’s also illegal, which seems to have been left out of all the conversations. “ The rush by short sellers to cover produces additional upward pressure on the price of the stock, which then can cause an even greater squeeze. Although some short squeezes may occur naturally in the market, a scheme to manipulate the price or availability of stock in order…

What is illegal or not in finance feels more or less arbitrary.

Re: The Irony in the GameStop Story

#85

Post by moolcool »

PragmaticPulp wrote: post #19
gonzo41 wrote: post #4

Earlier quoted context omitted.

Gotta say I agree, after hearing non crap news for a year. It's nice to see a hedge fund eat their hat.

I think the sentiment will shift when people realize that some of these hedge funds invested people's pension money, or university endowments, or any other number of people's funds. WSB has promoted a cartoonish version of Wall Street where hedge funds only hold rich, evil people's money. That's not really how this works. A lot of people are also going to be disappointed to learn that some Wall Street firms profited…

I hate this sentiment so much. As if it's a bad thing that Wall Street gangster hedge funds are finally feeling the squeeze that they put on everyday working people, just because some of the money they control is pension money or university endowments. It's literally the same rationale people use to justify staying in abusive relationships. Controlling some crumbs of the great unwashed's money gives these billionaires zero moral authority to do the crap they get away with every single day. Fuck them, then fuck them again. They deserve every ounce of this and then some.

Re: The Irony in the GameStop Story

#86

Post by JW_00000 »

This story is constantly being framed as "the angry mob" vs "Wall Street hedge funds". But surely other professional investors ((hedge) funds, high frequency traders, algorithmic traders) are also jumping on the bandwagon, to (1) eliminate a competitor and (2) make a profit themselves on the way. I read yesterday that (at least one platform for) algorithmic traders have been monitoring subreddits like /r/WallStreetBets since the start of 2020, to immediately buy what is mentioned favorably there before retailers bring the price up.

The way I see it, is that among the professional investors, one will lose hard (Citron), while most others will profit. When the sell-off starts, they'll be able to sell first, thanks to their sub-ms connections to exchanges, algorithms that monitor media in real time (including reddit!), and employees that are constantly monitoring this whenever the markets are open (as opposed to retailers doing this in their free time).

Among the retailers, a few will win big (/u/DFV), while most will lose. They'll either stubbornly "HODL" if they're in it to "get a message across", or if they're in it for profit, they'll notice the sell-off too late and act too late, probably exacerbated by RobinHood suffering outages at that point.

So my prediction is that in the end one hedge fund will go down while others will profit from it... Most retailers will lose. Then what was the point?

Re: The Irony in the GameStop Story

#87

Post by kodt »

user_error wrote: post #7

> Left claims that the “mob” has overstepped the mark and harassed him and even his family in a way that is actually illegal. If that is true, shame on them, and those involved should be prosecuted. This must be condemned without hesitation; nothing excuses that type of behavior. Online harassment of those with different opinions, particularly in pursuit of profit, is disgusting and becoming all too common, and stand…

He claimed that people shared his home/personal phone and were calling him and his children and threatening them.

Re: The Irony in the GameStop Story

#88

Post by blendergeek »

MontagFTB wrote: post #10

This article claims the catalyst for GME’s meteoric rise was a change to their board altering the company’s narrative. Josh Gross claims it’s because u/DFV liked their 10-Qs. So which is it? One? Both? Neither? https://twitter.com/endtwist/status/1354547622133051393?s=20

I would guess its probably all of the above.

Re: The Irony in the GameStop Story

#89

Post by bilbo0s »

flerchin wrote: post #60

I keep seeing folks saying that retail will be left holding the bag. Retail folks are buying GME and holding. Worst case they're out their initial investment. GME shorts like Melvin Capital are out many multiples of their initial investment, their losses are unbounded. Retail (r/wsb) understands this, and is willing to lose their $600 or whatever to screw over the institutions.

The institutions can game all the way up though. The mistake the retail guys made in this instance was not accounting for the other institutional vultures Who had no prior interest in it, but would opportunistically pile in.

It’s becoming clear that a better designed attack was necessary. Unless government steps in, this attack will enrich market makers and a lot of hedge funds, while cleaning out retails who may not have fully understood the dynamics of this attack.

In my view though, that’s the market. It’s a learning process. Retailers will gain more understanding and the next attack will be better designed.

Re: The Irony in the GameStop Story

#90

Post by tom_mellior »

jakelazaroff wrote: post #27
drewcon wrote: post #8

I still feel like these stories are missing a core distinction. If these WSB folks rallied around GME because they were true believers of a beloved brand with faith in a turn around plan, god love em. I think that’s an interesting phenomenon that upgrades retail collective trading in much the same ways mutual funds behave on behalf of loads of retail investors. But that’s not what happened. The brand is irrelevant. I…

Why is now when we start caring about that, though? I don’t think the current position of GME is a reasonable one, but neither is the situation in which 140% of its shares have been shorted. And it’s not just academic: that makes it difficult for the business to grow. The hedge funds are literally trying to suffocate it into bankruptcy. And yet no one raised the alarm then. No one worried about retail investors with…

> now that they [=hedge funds]’re losing

Are they, though? Sure, some of them lost. But there are others that will only get stronger if some competitors are eliminated (a point also made by https://news.ycombinator.com/item?id=25957142). And even the ones that lost big so far can get back into the frenzy. Buying on the way up... or shorting near the top.

Here is my take on the "irony" of the situation: Hedge funds can make money off of stocks they believe to be overvalued. So the WSB activists handed them... a stock that everyone knows to be MASSIVELY overvalued. Yeah, that will show them.

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